“At a time of record profits, Big Oil is refusing to increase production to provide the American people some much needed relief at the gas pump,” said Rep. Frank Pallone, DN.J., chairman of the House Energy and Commerce Committee.
Oil executives, testifying before Congress for the second time in six months, responded that oil is a global market and that oil companies don’t dictate prices.
“We do not control the market price of crude oil or natural gas, nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging,” said Chevron CEO Michael Wirth.
The hearing comes as President Joe Biden has ordered the release of 1 million barrels of oil per day from the nation’s strategic petroleum reserve for six months in a bid to control energy prices that have spiked as the United States and allies have imposed steep sanctions on Russia over its invasion of Ukraine. The national average gas price was $4.16 a gallon for regular on Wednesday, up from $2.87 a year ago, according to AAA.
Biden and other Democrats have blamed Russian President Vladimir Putin and the US oil industry for the increase, citing reports that oil companies have made record profits in recent months as prices have risen following Russia’s invasion of Ukraine.
“This is the Biden price hike,” countered Rep. Cathy McMorris Rodgers of Washington state, the committee’s top Republican.
Noting that prices were increasing before Russia invaded Ukraine in late February, McMorris Rodgers said Americans “are too smart and have not fallen for this” claim by Biden and other Democrats. She called the hearing “purely political.”
ExxonMobil CEO Darren Woods said Exxon has halted investments in Russia and is withdrawing from operations there. The company is increasing production in the United States, Woods said, including in the oil-rich Permian Basin in New Mexico and Texas. Exxon also is increasing production outside the US, including “a world-class development in Guyana,” Woods said.
Under questioning from Pallone, Woods and other CEOs said oil companies have no plans to halt payments of dividends to stockholders or to restrict stock buybacks that have enriched shareholders and company executives. The six companies at the hearing recorded $77 billion in profits last year, they told Pallone.
Rep. Kim Schrier, D-Wash., said gas prices are close to $5 per gallon in her Seattle-area district. Her constituents “are mad, and they should be,” she said, citing the record profits oil companies are reaping.
“This feels like gouging. It even feels like profiteering,” Schrier said. Prices at the pump have not gone down in recent weeks along with crude oil prices, she and other Democrats noted.
At a time of war and high prices, “oil companies should not be sending profits back to shareholders,” she said, urging oil executives to restore production to pre-pandemic levels.
Wirth, the Chevron CEO, said his company produced a record amount of oil in 2021, while also making sure to “return value to shareholders” through higher dividends and stock buybacks.
“They’re not mutually exclusive. We can do both,” he said.
Biden has called on Congress to impose financial penalties on companies that lease public lands but don’t produce oil, a request that so far has been ignored. Biden also invoked the Defense Production Act to encourage mining of critical minerals for batteries in electric vehicles, part of a broader push to reduce use of fossil fuels and address climate change.
“The bottom line is if we want lower gas prices we need to have more oil supply right now,” Biden said last week in announcing the release of oil from the strategic petroleum reserve. “This is a moment of consequence and peril for the world and pain at the pump for American families.”
Higher prices have hurt Biden’s approval domestically and added billions of oil-export dollars to the Russian government as it wages war on Ukraine.
The release of oil from the US stockpile could reduce oil prices, although Biden has twice ordered releases from the reserves without causing a meaningful shift in oil markets. Biden said last week he expects gasoline prices could drop “fairly significantly.”
Oil companies have pledged to boost domestic production, but it is growing slowly. Executives point to supply chain and labor constraints as a result of the COVID-19 pandemic, as well as investor demands for returns. They have called for more federal permits to allow additional leases.
Besides Exxon and Chevron, other companies represented at the hearing were Shell, BP, Pioneer Natural Resources and Devon Energy.